Free Custom «Is the United State's Title of Superpower at Stake because of Import/Export Shortcomings?» Essay Paper

The United States has been one of the most respected world superpowers for a long time owing to its military and economic power. Because of the leading position that the country occupies in these important areas, the US has always been at the top of the world in terms of import and export. The booming manufacturing industry, as well as progressive consumption culture, has contributed to the US occupying an advantageous position as a superpower. However, in the recent past, America’s status as a superpower has been challenged by countries like China and Russia where economic and military prowess has been on the increase in the recent past.

China has recorded a 10% GDP growth over the last ten years against America’s less than 5% growth during the same period. China also has the largest standing army in the world. As a result, the US is no longer enjoying the prospect of being a leader in economic and military strength. The other area is the import and export, where many innovative Americans have ensured that the country enjoys a surplus in terms of import and export differences. However, as other countries have become more creative and fewer American companies started to produce cutting-edge goods, America has found itself in a position where it imports more than it exports. The aim of the current paper is to provide an analysis of whether America’s position as a superpower is threatened by the import/export shortcomings witnessed in the recent past.

 

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A study by Amine sought to explore the trend in the American economics during the 1950s. According to this study, the US was the major supplier of the world’s gross products. During this period, the US supplied 50% of the world exports. Today, this number has fallen to 21%. At the same time, 60% of the manufacturing production emanated from the United States with the number halving by the end of the century (Amine 194).

In 2001, the US share in the world export was 21% while the collective European Union had 23% without counting the intra-EU exports. Amine observes that the decline in the world share of the US regarding exports has been tremendously felt during the last 50 years (195)(. The  rise of the countries like China and India has reduced the share of the US in exports. At the same time, the US is no longer as innovative as it used to be in the 1950s, when manufacturing and production were booming. The US is no longer a leader manufacturer even though consumption has steadily increased (Amine 194). As a result, the imports have surpassed the exports leading to a situation where the US can no longer negotiate as strongly as it used to do in the world market.

In a study to examine the point when America started having a deficit in its trade, Fergusson notes that the fall of America from the world’s leading position began with a deficit in its trade in goods in 1971 (9). Since then, the American exports only exceeded imports for the year 1973 and 1975. Even though the country has managed to achieve overall trade balance with other countries despite the deficit, the impact is evident in the power of influence that the country held when it did not have the deficit. This deficit in exports means that the country is not able to influence albeit forceful, the financial, telecommunication, insurance, advertising, and other business services that are associated with the superpower (Fergusson 10). The United States has also experienced a widening gap in its merchandise deficit making it difficult for investment in the overseas.

The current account of the US, which has almost been in surplus since 1895, has sharply deteriorated in the recent past. On the other hand, the surplus for competitors has been on the rise with countries like China making big strides in manufacturing and production industry (Fergusson 12). Moreover, following a reduction in the economic power and the inability to control the markets, the superpower status of the United States is undermined by emerging powerhouse in the military and economic endowment.

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In a study to examine the impact of the rise of China as an economic power, Subramanian seeks to study the concerns of policymakers in the United States (2). Policymakers in the United States were concerned that the rapid rise in the economic power of China was posing a threat to the position of the US as the only remaining superpower. With China managing to produce more goods for export than the US, the shift in power is imminent. The continued GDP growth means that China will soon overtake the US as the largest economy in the world. From a critical point of view, China’s rise is viewed in terms of the decline in the US and hence ceding the position of the only superpower. The author of the study also notes the rise in the trade deficits with other emerging economies in the world. Notably, a widening deficit between the US and other economies implies that the prestigious status that the country held on the negotiation table is no longer available (Subramanian 5). Evidently, emerging economies are able to challenge some of the decisions that contradict their economic and military policies and, therefore, to stand up against what they view as bullying or preference treatment by the US. The ability to enforce trading laws and policies is affected when the country is a net importer other than a net exporter.

Being the world’s net exporter for a long time, the US was able to negotiate for trade deals that favored its position in the global business. Nonetheless, as more countries have driven towards self-sufficiency of the many products that were imported from the US, the country finds itself in a position where it can no longer negotiate forcefully as it used to do. According to a study by George, Robideaux, and Taylor, non-US companies have become dominant on the world stage, which was once a haven for the US ones (25). In terms of electronics, nine out of ten electronics companies influencing the direction are non-U.S. companies. In the area of motor vehicle assembly and gas and electric utilities, American companies are trailing companies from the emerging economies like China and Japan. Other areas where the country has lost dominance include banking, chemical and pharmaceutical products, airlines, and telecommunications.

George, Robideaux, and Taylor note that it has not helped that telephony started in America (29). The reduction of the American superpower status is also evidenced by the growing number of top corporations in the world. The number of these companies compared to the US and other countries is an indication that competitors emerge thus causing a stiffer competition. For instance, according to the ranking of top 100 corporations in the world, America had slightly more than one-fifth of the total number (George, Robideaux, and Taylor 32). In contrast, the United Kingdom, Germany, France, and Netherlands, when put together, their economies are 70% of the US economy and have almost twice the number of top corporations as does America on the list.

The exploration of world investment by the countries also indicates that the reduction in export from the US and the increase in import means that America was investing less. According to Angevine and Carlos, America’s direct investment fell from 47% in 1960 to 21% in 2001 (72). Compared to the countries like Great Britain, America’s share of direct investment has fallen in the recent past. As such, the country is borrowing more for domestic use due to reduced direct investment. It also means that it cannot compete effectively in supplying materials and other products because of little direct investment. The resultant effect is that there is reduced power to influence the decisions in the world market because of emerging strong competitors with excellent services and products to offer. A change in the ability of America to influence the international community is also seen in the business mergers and acquisitions. US companies are less involved in the cross-border deals, accounting only to 5% of all the mergers and acquisition deals around the world (Angevine and Carlos 5).

In a study to examine the change in the income and expenses of Americans, Beine, Bos and Serge note that America is able to cover for the current deficits through borrowing (470). It has reduced its ability to produce products for export because what is available is used in domestic markets. The borrowing by the US up to the record 5% of the GDP is an indication that the country is not able to sufficiently meet its local needs without acquiring foreign debt (Beine, Bos, and Serge 475). By allowing foreigners, in the form of individuals, governments, and companies, to buy assets in terms of corporate bonds, stocks, real estate, and treasury bonds, the country’s leadership is turning America into a debtor. America is technically financed by external deficits (Beine, Bos, and Serge 480). While evidence shows a reduction in export and an increase in import, the US economy remains strong even compared to the emerging economies like China.

In comparison to China’s economy, the World Bank estimated that the GDP for the US totaled to more than 53,000 dollars compared to China’s GDP of 6,807 dollars (Chen and Chen 48). The meaning of this is that the dramatic economic growth in emerging economies led by China finds its way into the hands of consumers following the massive economic growth driven by state-owned companies as opposed to private industry. In this way, the US economy is viewed as being able to sustain it for the next five decades as the world superpower. Furthermore, records from World Bank indicate that despite the apparent threats to the status of US as a leader in the world, the economy of the country remains the only bedrock of the world global financial system. The dollar remains the primary currency of worldwide business transactions with over 80% of transactions done in the currency (Chen and Chen 52). The same applies to the currency market transaction.

As concluded by Gallagher, the continued trust in the US currency in the world and overall economic stability of the country is an indication that it remains a world superpower (187). The dwindling exports compared to the imports that the country experiences currently is not a proof of its diminishing influence in the world. America still affects the economic and social policies in the world through its currency, which is used to benchmark most of the business deals in the world (Gallagher 190). Even where the exports have reduced, the country is able to influence the cost of imports through its strong currency. The author, therefore, does not agree that only import and export shortcomings should be used as the basis for evaluating the superpower status of the US. The argument is that other factors come in place to determine how the influence over world policies is created. The rapid rise in economic and technological status does not threaten the position of the US as the world superpower. These countries continue to look up to the US as an example of democracy and development.

Summary

From the above literature review, there are differing opinions as to whether the US has lost its status as the world superpower following the deficits in export and import. Notably, the researchers acknowledge that export-import deficits or balances are important measures of the ability of a country to negotiate on a world stage. However, given the present changes in the status of the net imported export, there are those who argue that the US can no longer be influential in formulating trading policies in organizations like the world trade organization. At the same time, emerging economies are now more important and influential in the kind of policies that are adopted at the international level. The US can only act as equal partners in the negotiations. Thus, it is accepted that to a large extent, America has lost its status as the only world superpower. It is further enforced by the fact that major leading organizations in various sectors are no longer based in the United States. Thus, the US is importing more than it is exporting in the long run and hence requires negotiating with other partners on an equal level.